US Penchant for Tariffs Keeps Investors on Edge

Jun 03 10:06 2019 Print This Article

Overview:  The weekend failed to break the grip of investor worries that is driving stocks and yields lower.  The US Administration's penchant for tariffs is not simply aimed at China, where there is some sympathy, but the move against Mexico, dropping special privileges for India, and apparently, had considered tariffs on Australia.  At the same time, the threat of 25% tariff on auto imports.  Meanwhile, the recent data, including today's PMI readings, show a world economy struggling even before the escalation.  Equities have continued to surrender gains seen in the January to April period.  The Nikkei gapped lower to levels not seen mid-January.  Taiwan, India, and South Korean markets advanced.  Foreign investors bought South Korean shares for the second consecutive session.  Previously there were two other sessions since the end of the tariff truce between the US and China that foreigners bought Korean shares.  Europe's Dow Jones Stoxx 600 is around 0.7% lower in the morning to return to levels seen in mid-February.  US shares are trading lower in Europe, and the S&P 500 is set to gap lower again, and our 2700-2720 target is coming into view.  Bond yields in Asia-Pacific rose, but European yields on falling, led by a six basis point decline in Italy, but it not doing much for Italian banks shares, which are holding just above the year's low set before the weekend.  The US 10-year yield is off four basis points to2.08%.  The dollar is sporting a slightly heavier profile against most of the major currencies, led by the Swiss franc and the New Zealand dollar.    Among emerging markets, the greenback is mixed.  Asian currencies are mostly firmer.  The Turkish lira is off 0.5% and is set to end a seven-day advance.  The Mexican peso is softer but above the pre-weekend low.  The Chinese yuan slipped less than 0.1% for the second consecutive session. 

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About Article Author

Marc to Market

Marc Chandler has been covering the global capital markets in one fashion or another for more than 25 years, working at economic consulting firms and global investment banks. Chandler attended North Central College for undergraduate work, where he majored in political science and the humanities. He holds master's degrees from Northern Illinois University and University of Pittsburgh in American History and International Political Economy. Currently Chandler teaches at New York University Center for Global Affairs, where he is an associate professor. A prolific writer and speaker he appears regularly in the press and has spoken for, and is an honorary fellow of, the Foreign Policy Association. In addition to being quoted in the financial press daily, Chandler has been published in the Financial Times, Foreign Affairs, and the Washington Post. In 2009, Chandler was named a Business Visionary by Forbes. In 2009, his book, Making Sense of the Dollar, was published by Bloomberg Press and received a Bronze Award from Independent Publishers.

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